We’ve been working on a series of books: – Easy EVM is published: See more on the book – Easy CPM is a work in progress, publication later this year – Easy SHM will follow in 2022.
A number of researchers, particularly Bent Flyvbjerg, Chair of Major Programme Management at Oxford University’s Saïd Business School have been highlighting the consistent failure of mega-projects to deliver on budget. It appears this is not a new thing.
Working on a side-project to the publication of my Easy EVM ‘course-in-a-book’, I was looking at the origins of engineering cost management and found that under estimating engineering projects seems to have been common in the 18th century. Financial controls in both business and projects extend back into antiquity, but developing the governance and technical processes to accurately estimate new engineering works was primarily a development of the 19th and 20th centuries, but has this led to improved outcomes?
The world’s first major transport boom was the construction of several thousand kilometers of canals in the United Kingdom (mainly in the English Midlands between 1757 (the opening of the Sankey Canal near Liverpool, followed by the Bridgewater Canal near Manchester in 1761) through to the 1830s. From 1840 onward, the canals began to decline, due to competition from the growing railway network. The canal projects were largely financed by public subscription to the purchase of financial bonds. But, the accuracy of the construction cost estimates used by the canal companies to raise their capital were to say the least mixed (although many of these canals were highly profitable until supplanted by railways). A comparison of the estimate to the actual costs on a select number of canals in the table below shows an average increase in price of 2.79.
Source: Jones, T, Engineers and Their Estimates, Journal of the Franklin Institute, Franklin Institute, Philadelphia PA, Vol XXV, 1840. From The Early History of Cost Engineering John K. Hollmann, 2016: AACE® International Technical Paper
J. A. Sutcliffe, in his Treatise on Canals and Reservoirs, published by Law and Whittaker, London, 1816 has this to say at page 168 “Had the engineer told the subscribers at first what would be the fatal consequences of this canal……..; and had he given them a true statement of the expense, and a rational estimate of the probable quantity of tonnage [to be shipped on the canal], most likely the spade would never have been put into the ground; but whether giving this kind of plain, useful information, is any part of the engineer’s creed, I leave the subscribers to judge by his estimates.”
The profession of engineering, and the sub-disciplines of estimating and cost-engineering have come a long way since the early 1800s, so why do so many major projects still end up underestimated? The canals discussed by Sutcliffe were funded by ordinary people buying bonds (and many losing their money); modern project such as the London Cross Rail are funded by ordinary people paying taxes. What’s clear, is governance and controls issues for major engineering project have not changed much in 200 years, some projects are successful, others are not, and differentiating between the two before they start seems to be a fundamental challenge.
The failure to accurately estimate costs, risks, and revenues has been a recurring theme of Prof. Bent Flyvbjerg’s research; many of his papers are easily accessed via a Google search. Then, once you have a reasonable cost estimate, world class controls such as properly implemented Earned Value Management (EVM) exist and are important for delivering the project on-budget; but the use of EVM is also far from common. The objective of writing Easy EVM is to help change this by showing what’s needed to implement a pragmatic EVM system based on ISO 21508, explained in normal project/business language.
We have been busy beavers updating the PM Knowledge Index on our website with Papers and Articles. Some of the more interesting uploaded during the last couple of weeks include:
Anyone owning a unit in a strata title development in Australia and many other parts of the world will be familiar with the concept of ‘Lot Entitlements’ which set the share of corporate/common fees paid by each unit owner and their voting rights in the owners’ corporation.
Similarly, most English-speaking people will be aware of the expression she got off ‘scot-free’ meaning the person was released without receiving the deserved or expected punishment. Other similar meanings of scot-free are: without being harmed (possibly derived from a passage in Shakespeare’s Macbeth), or without paying their dues. But where do these strange terms originate?
The term scot-free has nothing to do with Scotland. The word ‘skot’ is Old Norse for a payment or tax. It came into Middle English as ‘bescot’, referring specifically to a customary tax paid to a lord, bailiff, or sheriff, and into modern English as ‘scot’. Therefore, scot-free literally means exempt from tax; it has since been broadened to indicate ‘exempt from punishment’. In a Viking settlement, some people through privilege or service were ‘skot-free’ and did not pay taxes.
The flip side of some people being ‘scot-free’ was the need for the rest to pay their share of the taxes! To manage the different amounts people had to pay, the overall tax for the community was divided into ‘lots’ and then each taxpayer had to pay their lot. Fast forward 1500 years and our share of the annual corporate fees for the building we live in is based on out ‘lot entitlements’ and there is no way we can get off scot-free……
This is your last chance to register for PGCS 2021 at the standard rate. We have a full and exciting program and the Symposium is guaranteed to run. Subject to the ACT remaining virus free, the event will be hybrid, with both in-person and virtual attendees. If the situation changes, we are set to transition to a fully virtual event. Face-to-face delegates will be offered the option of either transitioning to a virtual registration and receiving a partial refund, or receiving a full refund. However, at the moment we are busy putting the final planning in place for a successful hybrid event. Don’t miss out! https://www.pgcsymposium.org.au/
The Department of Defence, and particularly CASG have been involved in the development of PGCS since its inception in 2013. This year is no different with a powerful line up of speakers in the Defence Stream including keynote presentations by Ciril Karo, Group Business Manager, CASG, Shane Fairweather, First Assistant Secretary Rotary, Aerospace and Surveillance Systems CASG.
These two keynote presentations are supported by technical papers including:
Andrew Butt: Joint Confidence Levels – combining project control artefacts to inform decision making.
Andrew Goodwin: An update on the significant developments in integrated project controls, EVM and project reporting within and external to CASG.
LCDR Victoria Jnitova and GPCAPT Adrian Xavier: Measuring RAAF training system resilience using survey instrument.
Dr Anh Pham-Waddell: Force Structure Plan 2020 costing methodology and outcomes.
Defence members (civilian and military) across Australia, and around the world, have special access to PGCS 2021. The details of your free access and other options for participating are outlined in DEFGRAM 269/2021.
The role of Earned Value Management (EVM) has had a decades long influencing role in project governance and controls systems theory, standards, and practical application, that extends well beyond the mandated use of EVM on major defence acquisition projects. It is regarded as a project controls best practice for the informed management of major acquisition projects within Defence and beyond. Application of ‘EVM lite’ systems which extract the data required for EVM analysis is becoming important in general project management world-wide across multiple industry sectors and geographies.
PGCS 2021 offers an unequalled opportunity for anyone interested in EVM to interact with presenters and PGCS committee members who have had leading roles in the theoretical development of and publication of global standards related to this important methodology over many decades.
If your project is in need of the practical application of project governance and controls best practices or has EVM in the mix, PGCS 2021 is the ideal place to find out more about the topic, or to update your knowledge to include the latest developments in this field.
There are of course many other themes and presentations including Agile, staff development and building multi-contractor teams; plus three International Masterclasses. The full program for PGCS 2021 is now on our website, to see more and register, follow this link: https://www.pgcsymposium.org.au/
Australian Dept. of Defence members (civilian and military) across Australia, and around the world, have special access to PGCS 2021. The details of your free access and other options for participating are outlined in DEFGRAM 269/2021.
Call for papers We still have a number of speaking slots open, including opportunities to entre your paper for the $1000 Walt Lipke Award and publication in the PGCAR peer-reviewed journal. The key requirements to be delivered on or before the 24th May are: – Register for the event on-line or by email, – Submit your paper title and abstract, – Provide a ‘head-shot’ and brief bio. If selected, your PowerPoint presentation will be required by early July.
If you choose to submit an optional written paper, delivery dates can be negotiated.
PGCS 2021 will run on-site at the Rex Hotel Canberra & Virtually from10-12 August 2021. PGCS is the only annual conference, run in Canberra, that is focused on improving project outcomes in the public and private sectors. Operating in a COVID safe environment, PGCS 2021 brings even more value to the program and project management professions featuring 20 sessions over 2 days followed by 3 Masterclasses
Registrations
Standard registrations are now open for in-person or virtual attendance at the Symposium and/or a Masterclass. To find our more or register see: https://www.pgcsymposium.org.au/register.html
The annual Walt Lipke Award is Australia’s premier project management paper award.
Now in its 5th year, the annual Walt Lipke Award is open to speakers at PGCS 2021 who submit a written paper in addition to their presentation slides; both industry and academic papers are welcome. Three papers are nominated as finalists each year prior to PGCS, and the winner is announced during the opening plenary session: The winner will receive:
The Walt Lipke Project Governance and Control Excellence Award (Perpetual Trophy)
A $1000 cash prize plus an award miniature to keep.
Complimentary attendance at PGCS, and
The presentation of your paper to the PGCS plenary as a Key Note speaker.
The runners-up will receive:
Complimentary attendance at PGCS (registration fees will be refunded if paid prior).
Presentation of your paper in the Walt Lipke Award stream.
Selection of the finalists and winner each year is at the sole discretion of the PGCAR academic panel and will be based on your papers:
Originality: a new or innovative concept
Practicality: the usefulness of the concept in the management of projects, programs and/or portfolios in the Australian context
Project Governance & Controls Annual Review (PGCAR) The PGCAR is a refereed journal published by PGCS in the weeks following our Annual Symposium. It includes the Walt Lipke Award winners, other symposium papers of sufficient merit, and academic papers submitted directly to PGCAR. Academic papers (and others on request) are subject to a rigorous double-blind peer review prior to publication.
Note: the PGCAR is open to all Australian academics seeking publication in a refereed journal, attendance at the Symposium is only required to be eligible for the Walt Lipke Award. For more on publishing in PGCAR click here.
PGCS 2021 will run on-site at the Rex Hotel Canberra & Virtually from10-12 August 2021.
PGCS is the only annual conference, run in Canberra, that is focused on improving project outcomes in the public and private sectors. PGCS 2021 brings even more value to the program and project management professions featuring 20 sessions over 2 days followed by 3 Masterclasses. See more.
Pat Weaver
Lynda Bourne
Aavssitedev's Blog